KARACHI – The Finance Supplementary (Second Amendment), 2019 has introduced a proposed overhaul in the valuation and levy structure for imported mobile phones, shifting from Pakistani Rupees to US Dollars.
This amendment aims to simplify the complex duty and tax structure associated with imported smartphones, presenting a more straightforward system.
Under the Finance Act 2018, a levy was introduced on smartphones exceeding a value of Rs. 10,000, with varying amounts of Rs1,000, Rs3,000, and Rs5,000 based on their import values in Pakistani Rupee terms. The proposed changes now seek to impose the levy based on the Cost and Freight (C&F) value in terms of US Dollars, eliminating the previous reliance on the Pakistani Rupee for valuation.
According to chartered accountants at PwC A. F. Ferguson, the mobile handset levy on smart phones of different categories is proposed to be abolished for C&F values up to US Dollar 100 (previously Rs 10,000, including duties and taxes). However, the maximum levy is set to increase to Rs7,000 from the previous Rs5,000.
The proposed rates for the revised levy structure are outlined as follows:
Above US Dollar 100 & up to US Dollar 200: Rs 500
Above US Dollar 200 & up to US Dollar 350: Rs 1,500
Above US Dollar 350 & up to US Dollar 500: Rs 3,500
Above US Dollar 500: Rs 7,000
Finance Minister Asad Umar presented the Finance Supplementary (Second Amendment) Bill, 2019 on the floor of the house on January 23, 2019. During his speech, he highlighted the complexity of the existing duty and tax structure for imported mobile phones. The minister noted that the Pakistan Telecommunication Authority (PTA) had implemented the Device Identification, Registration, and Blocking System (DIRBS) to block unregistered mobile phones.
In response to these developments, Minister Umar stressed the need to review the system to ensure that low-priced imported mobile phones do not become more expensive. The proposed changes include introducing simple slabs for implementing duty and taxes, with a specific focus on ensuring that duty and taxes are increased for higher-priced smartphones.
This move towards simplification and revised valuations is expected to streamline the taxation process for imported mobile phones, promoting transparency and ease of compliance. As the Finance Supplementary Bill undergoes further consideration, stakeholders in the mobile phone industry are closely monitoring these proposed changes and their potential impact on the market.
